On the Byline Times ‘A Class’ shares offer
I was interested to get an email on Christmas Eve asking if I wanted to buy newly “diluted” ordinary shares in Byline Times, the (mostly) online independent reporting outlet started up in 2018. I quite like some of what they’re trying to do, so I read, considered (from the point of view of my existing bias) and looked a couple of things up which intrigued me.
Here’s the main bit of the plug:
Our focus in 2025 is going to be on growing to the next stage so we can have even more impact. The signs are that we are going to be needed more than ever before with the impending Trump presidency and Elon Musk’s attempt to interfere with our political system.
That’s why we are keen that our supporters and subscribers get a chance to own a little of Byline Times themselves. So, we have diluted our shares and managed to price them at just £85.81 each. Shares are A class shares with voting rights. If you can afford to buy a share or two it would be great to have you on board as a shareholder. So far we have sold 347 shares which is a great start to help us raise £200,000 to spend on marketing the paper to grow in 2025.
I wasn’t able to tell at a glance on Companies House documents exactly what voting rights A class shares would give me, but I’m guessing if I bought a share for £85.81 they wouldn’t amount to much, because it looks like a holding company called JTC Trustees (UK) Ltd own the majority of the shares and are designated under company law provisions as being a legal person with “significant control” and this presumably means that they can outvote other shareholders on any issue they choose.
This is, of course standard practice with ordinary, transferable shares, but there are alternatives (see blow).
The bit that really started to intrigue me was when I looked at the shares prospectus, which is a requirement of the shares offer. This bit stood out:
This Information Memorandum (“IM”) is designed to communicate information relating to an invitation to acquire 2,331 A Voting Ordinary shares at £85.81 each in Byline Times Ltd (the “Company”). It is exempt from the general restrictions in the Financial Services and Markets Act 2000 (“FSMA” regarding the communication of invitations or inducements to engage in investment activities) on the grounds that it is designed only for a) investment professionals, b) certified high net worth individuals c) high net worth companies, d) certified sophisticated investors, e) self-certified sophisticated investors or f ) associations of high net worth or sophisticated investors.
Legally, there is absolutely nothing untoward here, because the prospectus (the Information Memorandum) has been approved by an “authorised person” in line with section 21 the FSMA, but it does look odd to preface the prospectus with the warning that it is not aimed at people like me (I fulfil absolutely none of the a-f criteria for exemption, and then send out an invitation to invest by email to people exactly like me i.e. people who’d signed up on a mailing list at some point.
In general, then, this feels like an attempt to raise money from people interested in what Byline Times are trying to do via a mechanism that doesn’t quite fit the avowed ethos.
As noted, there was, or even still is, an alternative. This would be the establishment of a Community Benefit Society (CBS) under the provisions of the 2014 Act (which brought together under one set of rules and FCA regulation older cooperative legal models) and the issuing of a non-transactional shares (so-called “community shares”) model.
This would have created wider appeal because a CBS operates on a one shareholder-one vote model, irrespective of the size of the shareholding, while still allowing for institutional investment (currently up to £100,000).
As such, I think this fundraising model might have been much more in the spirit of what Byline Times profess to be about; the very act of setting up a non-traditional mechanism could be said to be prefiguring a more democratic media (and wider) economy that militates against the excess of capitalism and associated elite corruption that Byline Times contributors writes about [1].
Perhaps those who took the decision to raise money via transferable shares dilution may have decided they preferred that way to other ways, or they may simply not have known about other ways. I don’t know, but both versions may be indicative of enduring barriers to the link between social critique and social action.
This is not the first time I’ve had a go at highlighting this stuff. Back when Twitter was still a thing, I suggested to Novara Media that, rather than just seek subscription cash, they might consider a CBS model as a way to both raise more investment AND engaged in a bit of progressive economic democracy. I also offered to do some free work on helping development the business plan for this.
The famous Novara person who replied did not know what I was talking about, and did not want to engage, other than to invite a ‘pile on’ from people who were led to assume I was part of the capitalist cabal seeking to take over Novara and make it into the Daily Mail. That was fun day, but I recount it here only to clarify that the lack of practical engagement by progressive media people in prefiguring progressive change itself is not limited to Byline Times’ slightly odd shares offer.
Anyway, I won’t be buying shares in Byline Times this time round, though I’m open to a chat about developing a shares offer in which I might invest.
Notes
[1] For my more techincal suggestion on how a media organization might expand its offer via a Community Benefit Society shares off, see here .
For my analysis of the role of non-transactional shares (so called “community shares”) in creating a ‘post-Meadean’ alternative to the capitalist model with local economies, see here.
In terms of my own current activism, the non-transactional shares model is of course at the heart of my work on community-owned renewable energy generation and low carbon heat technologies, though a wider aspiration still applies, albeit after a false start, about which I will write a lot soon).